Pace Environmental Law Review
Volume 29
Issue 1 Fall 2011
Article 7
September 2011
Cap and Trade Meets the Interstate Commerce
Clause: Are Greenhouse Gas Regulations
Constitutional after Lopez and Morrison?
Ilan W. Gutherz
Pace University School of Law
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Recommended Citation
Ilan W. Gutherz, Cap and Trade Meets the Interstate Commerce Clause: Are Greenhouse Gas Regulations
Constitutional after Lopez and Morrison?, 29 Pace Envtl. L. Rev. 289 (2011)
Available at: http://digitalcommons.pace.edu/pelr/vol29/iss1/7
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COMMENT
Cap and Trade Meets the Interstate
Commerce Clause: Are Greenhouse Gas
Regulations Constitutional after Lopez and
Morrison?
ILAN W. GUTHERZ
The Supreme Court’s decisions in United States v. Lopez1 and
United States v. Morrison2 have caused legal scholars to question
the enduring constitutionality of some of our nation’s key
environmental laws.3 However, no one has yet examined the
impact these decisions could have on federal proposals to address
global climate change.4

J.D. Candidate, Pace University School of Law; M.E.M. Candidate, Yale
University School of Forestry & Environmental Studies. Thank you to Professor
Karl Coplan for his advice in the development of this topic and to PACE
ENVIRONMENTAL LAW REVIEW Editors Elizabeth Bennett and Jennifer McAleese
for their comments and guidance throughout the writing process.
1. United States v. Lopez, 514 U.S. 549 (1995).
2. United States v. Morrison, 529 U.S. 598 (2000).
3. See, e.g., Christine A. Klein, The Environmental Commerce Clause, 27
HARV. ENVTL. L. REV. 1, 28-29 (2003); Jonathan Cannon, Environmentalism and
the Supreme Court: A Cultural Analysis, 33 ECOLOGY L.Q. 363, 387-89 (2006);
Jonathan H. Adler, Judicial Federalism and the Future of Federal
Environmental Regulation, 90 IOWA L. REV. 377, 405-06 (2005); Bradford C.
Mank, After Gonzales v. Raich: Is the Endangered Species Act Constitutional
Under the Commerce Clause?, 78 U. COLO. L. REV. 375 (2007); Matthew B.
Baumgartner, SWANCC’s Clear Statement: A Delimitation of Congress’s
Commerce Clause Authority to Regulate Water Pollution, 103 MICH. L. REV. 2137
(2005).
4. As used in this Comment, “climate change” refers to a number of related
changes to the earth’s prevailing weather patterns that are caused by the
buildup of heat-trapping (“greenhouse”) gases in the atmosphere. These
changes include: higher average temperatures and significant deviations from
historical temperature norms across the globe; rising sea levels as a result of
greater summer melt and lesser winter freezing of the ice pack at the poles;
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This Comment attempts to answer that question. Part I of
this Comment begins by sketching the history of American
involvement in combating climate change. Part I also briefly
explains the three leading policy options for regulating
greenhouse gases in the U.S.: “cap-and-trade,” “command-andcontrol” regulations, and a tax on carbon. In Part II, I discuss the
significance of Lopez and Morrison to our present understanding
of the Interstate Commerce Clause. In Part III, I apply the
Court’s current Commerce Clause framework to the leading
options for limiting the emission of greenhouse gases. Part III
lays out the main constitutional arguments against and in favor
of these options, and draws on proposed legislation and
Environmental Protection Agency (EPA) regulations for
examples. In Part IV, I conclude that the Court’s current
approach to the Commerce Clause raises the possibility that
comprehensive greenhouse gas regulations could be ruled
unconstitutional, and that the answer will ultimately depend on
how the Court characterizes the challenged law. I also offer a
series of recommendations that will improve the chances that a
greenhouse gas regulatory system will withstand constitutional
scrutiny, even under the Court’s post-Lopez Commerce Clause
jurisprudence.
I.
FEDERAL REGULATION OF GREENHOUSE
GASES
Since the 1970s, the United States, along with the rest of the
world, has committed itself (in theory, at least) to stabilizing the
accumulation of greenhouse gases in the atmosphere at levels
increasing frequency of severe weather events such as storms, droughts, and
floods; and changes (both increases and decreases) to prevailing levels of
precipitation. See NAT’L ACAD. OF SCIENCES, UNDERSTANDING AND RESPONDING
TO CLIMATE CHANGE 16-18 (2008), available at http://dels-old.nas.edu/dels/rpt_
briefs/climate_change_2008_final.pdf. Although it is not among the effects of
“climate change,” the increase of carbon dioxide (CO2) in the atmosphere has
also been linked to increasing acidification of the oceans, as CO2 is dissolved in
seawater and converted to carbonic acid. See generally NAT’L ACAD. OF
SCIENCES, OCEAN ACIDIFICATION: A NATIONAL STRATEGY TO MEET THE
CHALLENGES OF A CHANGING OCEAN (2010).
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CAP & TRADE MEETS THE COMMERCE CLAUSE 291
that will prevent the worst consequences of climate change.5 In
the United States, legislation to limit the emission of greenhouse
gases (GHGs)6 from the industrial sector has been introduced in
every Congress since at least 1988.7 Starting in 2009, in response
to Massachusetts v. EPA,8 the EPA began to promulgate
regulations to limit greenhouse gas emissions from both mobile9
and stationary sources10 under the authority of the Clean Air Act
Around the same time, the U.S. House of
(CAA).11
5. See National Climate Program Act of 1978, Pub. L. No. 95-367, 92 Stat.
601, §§ 3, 5 (1978) (requiring the President to establish a program to “assist the
Nation and the world to understand and respond to natural and man-induced
climate processes and their implications”). The United States is also a signatory
to the United Nations Framework Convention on Climate Change, whose
objective is “to achieve, in accordance with the relevant provisions of the
Convention, stabilization of greenhouse gas concentrations in the atmosphere at
a level that would prevent dangerous anthropogenic interference with the
climate system.” United Nations Framework Convention on Climate Change,
May 9, 1992, 1771 U.N.T.S. 107 (1992), available at http://unfccc.int/resource
/docs/convkp/conveng.pdf.
6. Generally, the greenhouse gases that legislators have sought to limit are:
Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), and several other
lesser-known industrial gases. See, e.g., American Clean Energy and Security
Act of 2009, H.R. 2454, 111th Cong. § 711(a) (as passed by the House, June 26,
2009).
7. See Global Environmental Protection Act of 1988, S. 2666, 100th Cong.
(1988) (introduced by Sen. Stafford) (regulating chlorofluorocarbons, carbon
dioxide, ground level ozone, methane, and other pollutants); see also National
Energy Policy Act of 1988, S. 2667, 100th Cong. (1988) (introduced by Sen.
Wirth) (calling for national energy policy to reduce global warming); Global
Warming Prevention Act of 1988, S. 2867, 100th Cong. (1988) (introduced by
Sen. Chafee) (establishing national policies and promoting international efforts
in resource conservation strategies appropriate to preventing greenhouse effect);
Global Warming Prevention Act of 1988, H.R. 5460, 100th Cong. (1988)
(introduced by Rep. Schneider) (putting forth House version of S. 2867).
8. Massachusetts v. EPA, 549 U.S. 497 (2007) (holding that the EPA must
determine, pursuant to the Clean Air Act, whether greenhouse gases cause or
contribute to air pollution that will endanger public health or welfare).
9. See Proposed Rulemaking to Establish Light-Duty Vehicle Greenhouse
Gas Emission Standards and Corporate Average Fuel Economy Standards, 74
Fed. Reg. 49,454 (Sept. 28, 2009).
10. See Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule (Proposed Rule), 74 Fed. Reg. 55,292 (Oct. 27, 2009). This rule
became finalized on June 3, 2010. See Prevention of Significant Deterioration
and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514 (June 3, 2010)
(to be codified at 40 C.F.R. §§ 51, 52, 70, and 71).
11. 42 U.S.C. §§ 7401-7671(q) (2006).
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Representatives debated and passed the American Clean Energy
and Security Act,12 which would have capped emissions of GHGs
from most major sources and required regulated industries to
obtain allowances for every ton of GHG emitted.13
These two types of policies represent the leading approaches
to reducing emissions of GHGs in the United States. Under the
first approach, which is known as “command-and-control,”14 EPA
or an authorized state agency issues permits to emitters of GHGs.
These permits set a ceiling on the volume of specified GHGs that
each source can emit.15 EPA and the states monitor these
emissions and impose penalties on sources that exceed their
permits,16 thereby inducing polluters to reduce their emissions.
The second approach to regulating GHGs, “cap-and-trade,” builds
on the command-and-control model, but adds a market trading
component to the regulatory scheme in order to reduce the costs
of compliance.17 Under a national cap-and-trade system, the
federal government identifies an overall nation-wide target (a
“cap”) for emissions of GHGs, and divides that target into
“emission allowances.”18 These allowances operate like permits
under a command-and-control scheme — that is, an entity
holding allowances for X tons of GHGs may emit only that
amount of GHGs in one year, or suffer a penalty.19
The major distinction between cap-and-trade and commandand-control is that under cap-and-trade, the allowances can be
12. American Clean Energy and Security Act of 2009, H.R. 2454, 111th Cong.
(as passed by the House, Jun. 26, 2009).
13. The American Clean Energy and Security Act of 2009 was never brought
to a vote in the Senate.
14. See Camille V. Otero-Phillips, What's in the Forecast? A Look at the EPA's
Use of Computer Models in Emissions Trading, 24 RUTGERS COMPUTER & TECH.
L.J. 187, 193 (1998).
15. See, e.g., Prevention of Significant Deterioration and Title V Greenhouse
Gas Tailoring Rule, 75 Fed. Reg. 31,514-01 (June 3, 2010) (establishing phasedin schedule under which large emitters must obtain CAA permits to emit carbon
dioxide).
16. See 42 U.S.C. § 7420(2)(A) (2006).
17. See Nathaniel O. Keohane, Cap and Trade Rehabilitated: Using Tradable
Permits to Control U.S. Greenhouse Gases, 3 REV. ENVTL. ECON. & POL’Y 42, 43
(2009).
18. Id.
19. Id.
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bought and sold (i.e., “traded”) on the open market.20 Thus, if a
particular GHG emitter wishes to emit more GHGs in a given
year than her existing allowances would permit, she can buy
extra allowances from other emitters who do not plan on emitting
all of the GHGs authorized by their own allowances. For this
reason, cap-and-trade is, in theory, more efficient than a
command-and-control system.21
A third approach to reducing GHG emissions, a “carbon tax,”
has also received significant attention.22 Under a carbon tax
approach, emitters of GHGs would pay a tax for each unit of GHG
they release into the atmosphere.23 The theory behind such an
approach is that putting a price on GHG emissions will naturally
drive polluters to reduce their emissions in order to improve their
own bottom line. Notwithstanding the potential of a carbon tax
to reduce GHG emissions, this Comment focuses exclusively on
command-and-control regulation and cap-and-trade. These two
options are far more interesting from a legal perspective than a
carbon tax for two reasons. First, cap-and-trade and commandand-control regulations present greater constitutional difficulties
than the relatively straightforward carbon tax.24 Second, capand-trade and, to a lesser extent, command-and-control
regulations, are both more popular and more likely to be
implemented in our lifetimes. Therefore the constitutionality of
these options is a much more pressing legal question than is the
constitutionality of a carbon tax.
20. Id.
21. See Scott R. Milliman & Raymond Prince, Firm Incentives to Promote
Technological Change in Pollution Control, 17 J. ENVTL. ECON. & MGMT. 247,
249 (1989).
22. See generally JONATHAN L. RAMSEUR & LARRY PARKER, CONG. RESEARCH
SERV., R40242, CARBON TAX AND GREENHOUSE GAS CONTROL: OPTIONS AND
CONSIDERATIONS
FOR
CONGRESS
(2009),
available
at
http://www.fas.org/sgp/crs/misc/R40242.pdf.
23. See id.
24. This is because, regardless of its constitutionality under the Commerce
Clause, a carbon tax scheme will almost definitely be upheld as a proper
exercise of Congress’s Taxing Power. See U.S. CONST. art. I, § 8, cl. 1.
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II. THE COMMERCE CLAUSE AFTER UNITED
STATES V. LOPEZ
A. Background: the Commerce Clause from the 1940s to
the 1990s
The Commerce Clause of the United States Constitution
authorizes Congress to “regulate Commerce with foreign Nations,
and among the several States, and with the Indian Tribes.”25
Since the 1940s, when the Court decided United States v. Darby26
and Wickard v. Filburn,27 the Supreme Court has held that this
Clause, in combination with the Necessary and Proper Clause,28
authorizes congressional regulation of, among other things, the
wages private businesses pay their employees;29 the small-scale,
intrastate production of agricultural commodities for personal
consumption;30 the racially discriminatory practices of small
businesses that engage in interstate commerce31 or use products
obtained through interstate commerce;32 and even the wholly
intrastate use of private land if it is used to mine coal.33 Until
recently, the Court construed Congress’s ability to regulate all
manner of intrastate activities under the authority of the
Commerce Clause so liberally that then-Associate Justice William
Rehnquist complained that “[a]lthough it is clear that the people,
through the States, delegated authority to Congress to ‘regulate
Commerce . . . among the several States,’ one could easily get the
25. U.S. CONST. art. I, § 8, cl. 3.
26. United States v. Darby, 312 U.S. 100 (1941).
27. Wickard v. Filburn, 317 U.S. 111 (1942).
28. The Necessary and Proper Clause gives Congress the power “[t]o make all
Laws which shall be necessary and proper for carrying into Execution the
foregoing Powers, and all other Powers vested by this Constitution in the
Government of the United States, or in any Department or Officer thereof.”
U.S. CONST. art. I, § 8, cl. 18.
29. See Darby, 312 U.S. at 125.
30. See Wickard, 317 U.S. at 124-29.
31. See Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258
(1964).
32. See Katzenbach v. McClung, 379 U.S. 294, 304 (1964).
33. See Hodel v. Virginia Surface Min. & Reclamation Ass’n, Inc., 452 U.S.
264, 282 (1981) (regulation of environmental effects of coal mining was
constitutional because “[t]he prevention of . . . destructive interstate competition
is a traditional role for congressional action under the Commerce Clause”).
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sense from this Court’s opinions that the federal system exists
only at the sufferance of Congress.”34
However, beginning in 1995 with United States v. Lopez,35
the present Court has retreated from its predecessors’ expansive
and highly deferential view of congressional power under the
Commerce Clause.36 In Lopez, the Court held that a federal
statute criminalizing gun possession in schools exceeded the
scope of the Commerce Clause.37 Then, in United States v.
Morrison, the Court ruled that a federal law establishing a cause
of action for victims of gender-motivated violence also exceeded
the scope of the Commerce Clause.38 Most recently, in Gonzalez
v. Raich, the Court narrowly upheld provisions of the Controlled
Substances Act39 as applied to petitioners who wished to possess
or grow marijuana at home for personal medicinal purposes.40
B. The Lopez-Morrison Framework
Under the Court’s new approach to the Commerce Power,
Congress still possesses broad authority to regulate the “channels
of interstate commerce” and “instrumentalities of interstate
commerce, or persons or things in interstate commerce,” even if
34. Id. at 307-08 (Rehnquist, J., concurring) (quoting U.S. CONST. art. I, § 8,
cl. 3) (emphasis added).
35. United States v. Lopez, 514 U.S. 549 (1995).
36. See id. at 602 (Stevens, J., dissenting) (protesting “the radical character
of the Court’s holding” in Lopez); id. at 608 (Souter, J., dissenting) (arguing that
“it seems fair to ask whether the step taken by the Court today does anything
but portend a return to the untenable jurisprudence from which the Court
extricated itself almost 60 years ago.”); id. at 625 (Breyer, J., dissenting)
(arguing that “the majority's holding runs contrary to modern Supreme Court
cases that have upheld congressional actions despite connections to interstate or
foreign commerce that are less significant than the effect of school violence.”);
United States v. Morrison, 529 U.S. 598, 628 (2000) (Souter, J., dissenting)
(concluding that the majority departed from previous Commerce Clause
jurisprudence in striking down the Violence Against Women Act); id. at 656
(Breyer, J., dissenting) (arguing that “history, precedent, and legal logic militate
against the majority’s approach”).
37. Lopez, 514 U.S. at 567.
38. Morrison, 529 U.S. at 627.
39. Comprehensive Drug Abuse Prevention and Control Act of 1970 (CSA),
Pub. L. No. 91–513, Title II (codified as amended in scattered sections of 21
U.S.C.).
40. Gonzales v. Raich, 545 U.S. 1, 22 (2005).
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the object of regulation is found or takes place within a single
state.41 “Channels” are the conduits through which commerce
moves, including “navigable rivers, lakes, and canals of the
United States; the interstate railroad track system; the interstate
highway system; . . . interstate telephone and telegraph lines; air
traffic routes; [and] television and radio broadcast frequencies.”42
“Instrumentalities,” in contrast, are the physical objects —
automobiles, railroad cars, airplanes, barges — that move goods
and people across state lines.43 This category also includes goods
that are transported across state lines.44
In addition to these well-defined categories, Congress may,
under certain conditions, regulate intrastate activities that
“substantially affect” interstate commerce.45 Under the LopezMorrison framework, this third category is subject to three
limitations: the regulated activities must be economic;46 noneconomic activities may not be regulated based on their aggregate
impact on interstate commerce;47 and the relationship between
the regulated activity and its effect on interstate commerce must
not be indirect or attenuated.48
i. Regulated Activities Must Be “Economic Endeavors”
First, and most importantly, a law regulating wholly intrastate activity may only reach activities that are “economic in
nature.”49
An “economic activity,” is one that relates to
“commerce” or some form of “economic enterprise.”50
41. Lopez, 514 U.S. at 558.
42. Gibbs v. Babbitt, 214 F.3d 483, 490-91 (4th Cir. 2000).
43. See, e.g., Perez v. United States, 402 U.S. 146, 150 (1971) (aircraft is one
example of an “instrumentalit[y] of interstate commerce”).
44. See Lopez, 514 U.S. at 558.
45. Id. at 559.
46. Id. at 560.
47. Id. at 561; Morrison, 529 U.S. 598, 617 (2000).
48. Morrison, 529 U.S. at 612.
49. Id. at 613 (citing Lopez, 514 U.S. at 559-60).
50. Lopez, 514 U.S. at 561.
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“Economics,” according to the Court, “refers to ‘the production,
distribution, and consumption of commodities.’”51
In judging whether the regulated activity is an “economic
endeavor,”52 the Court does not appear to care whether the
activity could be undertaken for financial gain under certain
circumstances. Instead, the Court requires the regulated activity
to be, by its nature, “economic.”53 This approach requires the
Court to view the object of regulation in a narrow, abstract way.
For example, in Lopez, a majority of the Court determined that
the mere possession of a gun in a school zone was not an
“economic” activity,54 despite the fact that Alfonso Lopez, the
defendant, had carried his firearm to school as part of a business
transaction.55 Thus, in Lopez, the Court focused its analysis on
the intrinsic nature of the regulated activity (possession of a gun
in a school zone) in the abstract, without regard to the
(apparently extrinsic) fact that the activity was, in reality,
undertaken for “economic” reasons.56
Similarly, in United States v. Morrison, the Court held that
“[t]he regulation and punishment of intrastate violence” could not
be justified under the Commerce Clause because it was “not
directed at the instrumentalities, channels, or goods involved in
interstate commerce . . . .”57 Thus, the Morrison Court, too,
focused on whether the challenged law was explicitly “directed at”
51. Gonzales v. Raich, 545 U.S. 1, 25-26 (2005) (quoting WEBSTER'S THIRD
NEW INT’L DICTIONARY 720 (1966)).
52. Morrison, 529 U.S. at 611.
53. See id. at 613; Lopez, 514 U.S. at 560.
54. Lopez, 514 U.S. at 567 (“The possession of a gun in a local school zone is
in no sense an economic activity that might, through repetition elsewhere,
substantially affect any sort of interstate commerce.”).
55. Lopez had been promised forty dollars in exchange for delivering the gun
to another student, who needed the weapon so he could participate in an afterschool “gang war.” See United States v. Lopez, 2 F.3d 1342, 1345 (5th Cir.
1993), aff'd, 514 U.S. 549 (1995).
56. The Lopez majority accepted that “depending on the level of generality,
any activity can be looked upon as commercial.” Lopez, 514 U.S. at 565.
However, it explicitly rejected such an expansive view of the scope of Congress’s
Commerce Power because it would “bid fair to convert congressional authority
under the Commerce Clause to a general police power of the sort retained by the
States” and thereby erase the “distinction between what is truly national and
what is truly local.” Id. at 567-68.
57. Morrison, 529 U.S. at 618 (emphasis added).
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economic activity, and rejected the government’s argument that
“the nationwide, aggregated impact” of the regulated activity
would have “substantial effects on employment, production,
transit, or consumption.”58
Finally, in Solid Waste Agency of Northern Cook County v.
U.S. Army Corps of Engineers (SWANCC),59 and again in
Rapanos v. United States — two decisions involving Congress’s
power to regulate the filling of isolated wetlands under the Clean
Water Act — the Court suggested that allowing the federal
government to regulate the dumping of fill material in isolated,
non-navigable wetlands would “stretch[] the outer limits of
Congress’s commerce power and raise[] difficult questions about
the ultimate scope of that power.”60 The majority came to this
conclusion in spite of the fact that the dumping in both cases was
clearly “undertaken for economic reasons.”61 Thus, under the
Court’s post-Lopez understanding of the Commerce Clause, the
mere fact that a regulated activity is motivated by economic
incentives (in Lopez, financial gain from acting as a gun courier;
in SWANCC and Rapanos, financial gain from developing and
selling land) or might otherwise affect interstate commerce (as
was the case in Morrison) is not sufficient to bring the activity
itself into the ambit of federal regulation.
Chief Justice Roberts (who was serving on the D.C. Circuit
when Lopez, Morrison, SWANCC, and Rapanos were decided) has
also made clear that, in his view, Commerce Clause analysis
must focus on the regulated activity itself and not the reason it is
being done or the effect it has on other, unregulated economic
activities. In Rancho Viejo, LLC v. Norton, then-Court of Appeals
58. Id. at 615.
59. Solid Waste Agency of N. Cook Cnty. v. U.S. Army Corps of Eng’rs
(SWANCC), 531 U.S. 159 (2001).
60. Rapanos v. United States, 547 U.S. 715, 738 (2006) (Scalia, J., plurality
opinion) (quoting SWANCC, 531 U.S. at 173); see also id. at 776 (Kennedy, J.,
concurring) (warning that federal regulation of wetlands that lack “a significant
nexus [to navigable waters] . . . appear[s] likely, as a category, to raise
constitutional difficulties and federalism concerns”).
61. SWANCC, 531 U.S. at 193 (Stevens, J., dissenting). In SWANCC, the
petitioners had sought to fill several isolated ponds in order to build a landfill to
receive solid waste from a number of municipalities in the Chicago area. See id.
at 162-63. In Rapanos, respondents had attempted to fill isolated wetlands in
order to develop and sell their land for profit. See Rapanos, 547 U.S. at 719-20.
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Judge Roberts dissented from a denial of rehearing en banc in a
Commerce Clause challenge to the Endangered Species Act
because, in his view, the majority’s opinion “ask[ed] whether the
challenged regulation substantially affects interstate commerce,
rather than whether the activity being regulated does so.”62 Such
a focus, according to Roberts, was “inconsistent with the Supreme
Court’s holdings in United States v. Lopez and United States v.
Morrison.”63
In sum, post-Lopez, the majority’s approach to Commerce
Clause analysis requires a court to focus only on whether the
regulated activity is, intrinsically, “economic in nature.”64
Moreover, even regulations that curtail some activities which are
clearly undertaken for financial gain, or regulations which
themselves have a strong effect on interstate commerce, will not
pass constitutional muster unless they are “directed at” economic
activity.
ii. Unless They Are an Integral Part of a Larger
Economic Regulation, Non-Economic Activities
May Not Be Aggregated
The second limit on regulations that “substantially affect”
interstate commerce is related to the first. Under Lopez, a law
that broadly regulates both “economic” and “non-economic”
activities together, without distinguishing between the two, will
62. Rancho Viejo, LLC v. Norton, 334 F.3d 1158, 1160 (D.C. Cir. 2003)
(Roberts, J., dissenting) (emphasis in original); accord id. at 1159 (Sentelle, J.,
dissenting). See also GDF Realty Invs., Ltd. v. Norton, 326 F.3d 622, 634 (5th
Cir. 2003) (“Neither the plain language of the Commerce Clause, nor judicial
decisions construing it, suggest that . . . Congress may regulate activity (here,
Cave Species takes) solely because non-regulated conduct (here, commercial
development) by the actor engaged in the regulated activity will have some
connection to interstate commerce. . . . To accept [such an] analysis would allow
application of otherwise unconstitutional statutes to commercial actors, but not
to non-commercial actors. There would be no limit to Congress’ authority to
regulate intrastate activities, so long as those subjected to the regulation were
entities which had an otherwise substantial connection to interstate
commerce.”).
63. Rancho Viejo, 334 F.3d at 1160 (Roberts, J., dissenting).
64. United States v. Morrison, 529 U.S. 598, 613 (2000).
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not pass constitutional muster under the Commerce Clause.65
This is so even if the non-economic activity, in the aggregate,
would substantially affect interstate commerce.66 This limitation
on Congressional power constitutes a significant change from the
more liberal “aggregation principle” the Court adopted in
Wickard v. Filburn.67 In Wickard, the Supreme Court held that
even activities which by themselves have only a trivial effect on
interstate commerce — for example, the on-farm consumption of
wheat grown for personal use — may be regulated if the
aggregate effect of these activities taken together would impact
interstate commerce.68 To justify its departure from the Wickard
rule, the Morrison and Lopez Courts explained previous
Commerce Clause decisions this way: “[I]n every case where we
have sustained federal regulation under the aggregation principle
in Wickard v. Filburn the regulated activity was of an apparent
commercial character.”69
The Lopez Court, however, created an important exception to
this rule. A law that regulates some non-economic behavior may
still be considered constitutional if it comprises “an essential part
of a larger regulation of economic activity, in which the
regulatory scheme could be undercut unless the intrastate
activity were regulated.”70 If such a larger statutory scheme
exists, “the de minimis character of individual instances arising
65. See United States v. Lopez, 514 U.S. 549, 562 (1995) (taking issue with
the fact that the challenged law did not explicitly limit its reach “to a discrete
set of firearm possessions that additionally have an explicit connection with or
effect on interstate commerce”).
66. See Morrison, 529 U.S. at 617 (rejecting “the argument that Congress
may regulate noneconomic, violent criminal conduct based solely on that
conduct’s aggregate effect on interstate commerce”).
67. See Wickard v. Filburn, 317 U.S. 111, 127-28 (1942).
68. Id.
69. Morrison, 529 U.S. at 611 n.4 (citation omitted). Unfortunately, the
Court has declined to describe what makes an activity “apparently commercial.”
It is important to note that at least one circuit has argued that the new
commercial-non-commercial dichotomy enunciated in Lopez is not as stark as
that decision implies. United States v. Ho, 311 F.3d 589, 599-600 (5th Cir. 2002)
(arguing that dicta in Morrison leaves open the possibility that non-economic
activity may still be “aggregated” under the principles of Wickard v. Filburn).
70. Lopez, 514 U.S. at 561; Gonzales v. Raich, 545 U.S. 1, 25 (2005).
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under that statute is of no consequence.”71 Relying on this
exception, the Court in Gonzales v. Raich upheld a federal law
banning marijuana possession (which, in some instances, was
purely intra-state and non-economic) because the ban was an
essential component of otherwise constitutional federal regulation
of “quintessentially economic” activities.72
iii. The Link Between the Regulated Activity and its
Effect on Commerce Must Not be Indirect or
Attenuated
The third limitation on laws affecting interstate commerce is
that the link between the regulated activity and its impact on
interstate commerce must not be attenuated.73 The Court has
declared that Congress’s power over commerce “may not be
extended so as to embrace effects upon interstate commerce so
indirect and remote that to embrace them, in view of our complex
society, would effectually obliterate the distinction between what
is national and what is local and create a completely centralized
government.”74 For this reason, even extensive congressional
findings describing the link between the regulated activity and its
effect on interstate commerce will not save a statute if the Court
determines that the link between the regulation and its
commercial effect is too indirect.75 As many observers have
noted,76 the motivating factor behind this heightened scrutiny
over congressional decision-making appears to be concern for
71. Raich, 545 U.S. at 17 (citing Lopez, 514 U.S. at 558) (holding that a ban
on marijuana possession under the Federal Controlled Substances Act was
constitutional as applied to petitioners who grew marijuana at home for
medicinal use or obtained it for free from neighbors).
72. Id. at 25-27.
73. United States v. Morrison, 529 U.S. 598, 612 (2000).
74. Lopez, 514 U.S. at 557 (quoting NLRB v. Jones & Laughlin Steel Corp.,
301 U.S. 1, 37 (1937)); see also Morrison, 529 U.S. at 608.
75. See Morrison, 529 U.S. at 614-15.
76. See e.g., Christine A. Klein, The Environmental Commerce Clause, 27
HARV. ENVTL. L. REV. 1, 29 (2003); Jonathan Cannon, Environmentalism and the
Supreme Court: A Cultural Analysis, 33 ECOLOGY L.Q. 363, 388-394 (2006);
Bradford C. Mank, After Gonzales v. Raich: Is the Endangered Species Act
Constitutional Under the Commerce Clause?, 78 U. COLO. L. REV. 375, 397
(2007).
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ensuring a more robust federalism — one that guarantees that
the states will retain authority over their “traditional” areas of
control, including criminal law,77 family law,78 education,79 and
land use.80
Whatever its motivation, the present Court appears to have
discarded (in practice, if not in name) the highly deferential
“rational basis” test it long adhered to in favor of a stricter
Today, in evaluating whether an activity
standard.81
substantially affects interstate commerce, the Court will no
longer “pile inference upon inference” in order to find that such a
relationship exists.82 Rather, “[w]hether particular operations
affect interstate commerce sufficiently to come under the
constitutional power of Congress to regulate them” is now a
“judicial rather than a legislative question [that] can be settled
finally only by [the Supreme] Court.”83
III. THE EFFECT OF LOPEZ AND MORRISON ON
GREENHOUSE GAS REGULATIONS
The Supreme Court has yet to take up a Commerce Clause
challenge to federal regulations of greenhouse gases. However,
the Court’s recent Commerce Clause cases indicate several
potential lines of attack for opponents of these regulations. In
77. See Lopez, 514 U.S. at 564.
78. See id.
79. See id.
80. See Solid Waste Agency of N. Cook Cnty. v. U.S. Army Corps of Eng’rs
(SWANCC), 531 U.S. 159, 173-74 (2001) (holding that extending federal
regulation over isolated wetlands may unconstitutionally impinge on the states’
“traditional and primary power over land and water use.”); but see Hodel v.
Virginia Surface Min. & Reclamation Ass’n, Inc., 452 U.S. 264, 282-83 (1981)
(rejecting respondents’ argument that “because it regulates a particular land
use, the Surface Mining Act is beyond congressional Commerce Clause
authority.”).
81. See Lopez, 514 U.S. at 608 (Souter, J., dissenting) (arguing that the
majority’s approach “treats deference under the rationality rule as subject to
gradation according to the commercial or noncommercial nature of the
immediate subject of the challenged regulation.”); Morrison, 529 U.S. at 637
(Souter, J., dissenting) (arguing that the majority achieved its result by
“supplanting rational basis scrutiny with a new criterion of review”).
82. Lopez, 514 U.S. at 567.
83. Morrison, 529 U.S. at 614 (quoting Lopez, 514 U.S. at 557 n.2).
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this section, I demonstrate that the constitutional fate of federal
GHG regulations will depend in large part on four factors: (1) how
the Court characterizes the challenged regulations; (2) whether
the present Court continues to extend the “economic endeavor”
litmus test to future challenges of environmental laws; (3) how
rigorously the Court adheres to its more constrained
interpretation of Wickard’s aggregation principle; and (4) how
stringently the Court applies its requirement that the regulated
activities have direct, rather than attenuated, effects on
commerce.
A. Issue One: How Should the Court Characterize the
“Object of Regulation”?
The first and most important step in any constitutional
challenge will be to define the object of the regulation.84 When it
comes to environmental regulations in general, and climate
change laws in particular, this seemingly straightforward step
becomes considerably more difficult. Recent decisions in the
courts of appeals make clear that, in the wake of Lopez and
Morrison, courts continue to disagree about the proper approach
to this essential question. For example, some courts have upheld
federal environmental laws on the grounds that the statutes’ real
objects of regulation are natural resources that can generate or be
traded in interstate commerce.85 Courts have also upheld federal
environmental laws by casting these laws as direct regulations of
commercial activities that happen to be associated with negative
84. SWANCC, 531 U.S. at 173 (discussing that to decide whether a federal
regulation is constitutional under the Commerce Clause, the Court “would have
to evaluate the precise object or activity that, in the aggregate, substantially
affects interstate commerce”).
85. See, e.g., Gibbs v. Babbitt, 214 F.3d 483, 492 (4th Cir. 2000) (upholding
Endangered Species Act [hereinafter ESA] takings provision as applied to red
wolves because “with no red wolves, there will be no red wolf related tourism, no
scientific research, and no commercial trade in pelts”); Nat’l Ass’n of Home
Builders v. Babbitt, 130 F.3d 1041, 1052 (D.C. Cir. 1997) (upholding ESA
takings prohibition because it “prevents the destruction of biodiversity and
thereby protects the current and future interstate commerce that relies upon
it”).
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environmental impacts.86
In addition, courts have upheld
environmental laws under the theory that the laws’ primary
objectives are to protect the interstate market as a whole from a
harmful “race to the bottom” among the states.87 This third
approach relies on the Supreme Court’s analysis in Hodel v.
Virginia Surface Mining & Reclamation Association, a case in
which federal regulation of surface mining was upheld, in part,
because the “prevention of . . . destructive interstate competition
is a traditional role for congressional action under the Commerce
Clause.”88 However, Hodel was decided fourteen years prior to
Lopez, and so its precedential power is suspect in light of the
Court’s more recent departure from its traditional Commerce
Clause analysis.89
86. See, e.g., Rancho Viejo, LLC v. Norton, 323 F.3d 1062, 1068 (D.C. Cir.
2003) (holding that ESA takings prohibition is constitutional, in part, because
“the regulated activity is the construction of a 202 acre commercial housing
development” and such an activity is “plainly an economic enterprise”); United
States v. Ho, 311 F.3d 589, 602 (5th Cir. 2002) (upholding application of the
Clean Air Act [hereinafter CAA] to the defendant because his actions, in
violation of the Act, “were driven by commercial considerations”); Gibbs, 214
F.3d at 492 (upholding ESA takings provision because “[t]he protection of
commercial and economic assets [from predation by red wolves] is a primary
reason for taking the wolves”).
87. See, e.g., Gibbs, 214 F.3d at 501 (“Species conservation may unfortunately
impose additional costs on private concerns. States may decide to forego or limit
conservation efforts in order to lower these costs, and other states may be forced
to follow suit in order to compete. The Supreme Court has held that Congress
may take cognizance of this dynamic and arrest the ‘race to the bottom’ in order
to prevent interstate competition whose overall effect would damage the quality
of the national environment.”); Ho, 311 F.3d at 603-04 (arguing that CAA
asbestos standards are constitutional as applied to a defendant, because
defendant’s violation of the standards harmed the interstate market in asbestos
removal by giving him a commercial advantage over companies that complied
with the CAA); Nat’l Ass’n of Home Builders, 130 F.3d at 1054 (holding that
“[t]he taking of the [Delhi Sands Flower-Loving] Fly and other endangered
animals can also be regulated by Congress as an activity that substantially
affects interstate commerce because it is the product of destructive interstate
competition”); Rancho Viejo, 323 F.3d at 1079 (holding that the ESA is
constitutional, in part, because it aims to prevent a “race to the bottom” among
states that would “damage the quality of the national environment”) (citing
Gibbs, 214 F.3d at 501).
88. See Hodel v. Virginia Surface Min. & Reclamation Ass’n, Inc., 452 U.S.
264, 282 (1981).
89. Cf. Hodel, 452 U.S. 264 (1981) with Lopez, 514 U.S. 549 (1995). See supra
Part II-B.
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Other courts of appeals, as well as individual circuit court
judges, have rejected the approaches described above.90
Furthermore, the Court’s decisions in Lopez, Morrison, SWANCC,
and Rapanos appear to foreclose the argument that the
Commerce Clause permits federal regulation of “non-economic”
activities merely because the regulation of these activities would
impact the decisions of economic actors or, alternatively, because
the activities are undertaken for financial gain.91
In a constitutional challenge to either comprehensive capand-trade or piecemeal CAA regulation of greenhouse gases by
the EPA, the Court will have relatively few options for
characterizing the regulated behavior.
The most plausible
approach would be to characterize the regulated activity as the
emission, by a person or corporation, of greenhouse gases. This
approach would mirror the narrow “intrinsic nature” approach
embodied in the Lopez, Morrison, SWANCC, and Rapanos
decisions, rather than the more liberal approach relied upon by
the Court in Hodel92 and by the circuit court decisions discussed
above.93
If the Court decides that a cap-and-trade law or the EPA’s
GHG rules regulate the emission of GHGs, it will then ask
whether this activity falls into any of the traditional categories
reached by the Interstate Commerce Clause.94 Since a law that
regulates the act of emitting GHGs cannot be said to directly
regulate either channels, instrumentalities, or persons or things
90. See GDF Realty Invs., Ltd. v. Norton, 326 F.3d 622, 634 (5th Cir. 2003)
(“Neither the plain language of the Commerce Clause, nor judicial decisions
construing it, suggest that . . . Congress may regulate activity . . . solely because
non-regulated conduct . . . by the actor engaged in the regulated activity will
have some connection to interstate commerce.”); see also Rancho Viejo, 334 F.3d
at 1160 (Roberts, J., dissenting) (finding fault in the majority approach because
it “asks whether the challenged regulation substantially affects interstate
commerce, rather than whether the activity being regulated does so.”) (emphasis
in original); accord id. at 1159 (Sentelle, J., dissenting).
91. See supra Part II-B-i.
92. See Hodel, 452 U.S. at 282 (finding that “the Commerce Clause [is] broad
enough to permit congressional regulation of activities causing air or water
pollution, or other environmental hazards that may have effects in more than
one State.”).
93. See supra notes 86-87.
94. See Lopez, 514 U.S. at 558.
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in commerce, the Court will be left with only one option:
determining that this activity “substantially affect[s]” interstate
commerce.95
Alternatively, the Court might treat GHG regulations as if
their object of regulation was “the use of energy in the production
of electricity, energy-intensive goods, and locomotion” or, more
simply, “the production of energy for residential and industrial
uses.” Under either of these characterizations, the Court would
construe federal climate change law as if it was directed at the
economic activities of power plants, factories, and mobile sources
of GHGs, or the market for goods and services in which these
entities participate.
If supporters of GHG regulations prevail in convincing the
Court that the latter characterization of the regulated activity is
the most appropriate, their argument that these regulations are
constitutional will be considerably easier. A law that regulates
the production of electricity, or goods that are sold across state
lines, would undoubtedly qualify as a regulation of “persons or
things in interstate commerce.”96 Similarly, the cars, trucks,
trains, boats, and airplanes whose burning of fossil fuels would
constitute the regulated activity under the latter view of GHG
regulations would undoubtedly fall within the traditional
category of “instrumentalities of interstate commerce.”97 As
discussed above, regulations that target the traditional categories
of “instrumentalities” and “people or things” in interstate
commerce are presumptively constitutional.98
However,
supporters of cap-and-trade cannot be sure that the Supreme
Court will characterize the object of regulation as they do.
Therefore, there is a chance that supporters of GHG regulations
will have to defend the law as a direct regulation of the emission
of GHGs.
95. Id. at 559.
96. Id. at 558.
97. Id.
98. See supra Part II-B. Thus far, the Court has not applied its post-Lopez
“economic endeavor” test to these more well-defined components of interstate
commerce.
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B. Issue Two: Is the Regulated Activity an “Economic
Endeavor”?
Assuming that the Court decides that the object of regulation
is the emission of GHGs, and that this activity can only be
regulated on the theory that it “substantially affects” interstate
commerce,99 the Court will then inquire into whether the
emission of GHGs is an “economic endeavor.”
In answer, opponents of GHG regulation will likely argue
that the emission of greenhouse gases as industrial waste, when
viewed in isolation, is not a “quintessentially economic”
activity.100 They could point out that although GHG emissions
are unavoidable byproducts of burning fossil fuels for energy, the
rationale of Lopez, Morrison, SWANCC, and Rapanos appears to
foreclose the argument that all activities which may in some way
be associated with or undertaken in furtherance of traditionally
economic activities qualify as economic activities in their own
right.101 Opponents could also argue that emitting GHGs into
the atmosphere does not constitute “production, distribution, [or]
consumption of commodities,” a definition the Raich Court relied
upon to uphold a federal law banning marijuana possession.102
Thus, if the regulated activity is characterized, in the first
instance, as the emission of GHGs, opponents will be able to
make a strong case that the challenged GHG regulations
impermissibly target non-economic activities.
On the other hand, even if the Court decides that cap-andtrade or EPA-issued GHG rules regulate the emission of GHGs,
supporters of federal climate change regulations could still put
forth several arguments in support of the regulatory scheme’s
constitutionality. To begin with, supporters of cap-and-trade
could argue that the Raich Court’s definition of economics103
should be viewed merely as a recitation of several activities that
traditionally comprised the class of economic activities, rather
99. Lopez, 514 U.S. at 559.
100. Gonzales v. Raich, 545 U.S. 1, 25 (2005).
101. See supra Part II-B-ii.
102. Raich, 545 U.S. at 25 (quoting WEBSTER’S THIRD NEW INT’L DICTIONARY
720 (1966)).
103. See supra note 49 and accompanying text.
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than a limitation on the outer boundaries of the class. Thus,
supporters could argue that other types of activities — such as
the emission of climate-altering pollutants — should be
considered economic activities, even though they may not have
been listed in the definition of “economics” that appeared in the
1966 edition of Webster’s Dictionary.104
Next, supporters will likely argue that the emission of GHGs
leads to climate change and ocean acidification — two phenomena
that will undoubtedly impact economic activities in numerous
ways.105 Opponents, however, would most likely counter by
pointing out that the mere fact that a regulated activity exerts
secondary effects on the economy is not sufficient to render the
regulated activity itself “economic.” In support, they could point
to both Lopez and Morrison, in which the Supreme Court struck
down two federal laws because they regulated activities whose
impact on the national economy was secondary and indirect.106
Supporters could respond, in the alternative, that the
regulation of GHGs is a regulation of commerce because real,
active, interstate markets already exist for each of the regulated
greenhouse gases. In fact, carbon dioxide, methane, nitrous
oxide, and the other greenhouse gases are already traded across
state lines because they are useful inputs to a variety of chemical
104. See Raich, 545 U.S. at 25.
105. See, e.g., Massachusetts v. E.P.A., 549 U.S. 497, 521-23 (2007) (discussing
the “serious and well recognized” impacts of climate change on water
availability, natural ecosystems, the spread of diseases, and sea levels and
recounting that “[r]emediation costs alone . . . could run well into the hundreds
of millions of dollars.”). Importantly, unlike the other air pollutants regulated
by the CAA (sulfur dioxide, nitrous oxides, ozone, mercury, and particulate
matter), the emission of carbon dioxide, methane, or water vapor (the principal
GHGs) do not necessarily impact the economy directly by increasing the risk of
respiratory disease (as in the case of ozone and particulates), causing acid rain
(sulfur dioxide and nitrogen oxides), or polluting the water (nitrogen oxides and
mercury) in a given area. Rather, the impact of emitting carbon dioxide,
methane, or water vapor is mediated through complicated atmospheric and
biological interactions with aggregate long-term effects like sea level rise and
increased storm severity that are more easily detectable at a global scale than in
a local or regional economy.
106. See United States v. Lopez, 514 U.S. 549, 562 (1995); United States v.
Morrison, 529 U.S. 598, 617 (2000). See generally supra Part II-B-ii.
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and industrial processes.107 In light of the fact that these gases
have value in the interstate economy, supporters could argue that
the act of emitting GHGs into the air, rather than capturing and
selling them in the market, is an economic behavior because
emitters would thus be forgoing the compensation they could
receive if they captured and sold these gases in the market.
Even if the Court determines that the activities regulated by
cap-and-trade or command-and-control regulations are not
“economic,” it may yet uphold these laws if they comprise
“essential part[s] of a larger regulation of economic activity,”108
such that the otherwise constitutional regulatory scheme would
be undercut if the activities at issue were not regulated.109 In
order to decide this question, the Court will first determine what
the larger regulatory scheme is; second, whether this larger
scheme regulates interstate commerce; and third, whether
excising the challenged portion of the law would undercut the
larger scheme.110 This question is largely irrelevant in the case
of a comprehensive cap-and-trade bill, since a challenge to such a
107. Carbon dioxide, for example, is used in “refrigeration systems, . . . food
packaging, beverages, welding systems, fire extinguishers, water treatment
processes, horticulture, [and] precipitated calcium carbonate for the paper
industry.” Marco Mazzotti et al., Mineral Carbonation and Industrial Uses of
Carbon Dioxide, in INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, CARBON
DIOXIDE CAPTURE AND STORAGE 321, 332 (Bert Mertz et al., eds. 2005), available
at
http://www.ipcc-wg3.de/publications/special-reports/.files-images/SRCCSWhole Report.pdf. It also serves as an input for the production of urea, a
fertilizer, and is used to extract petroleum in a process known as “enhanced oil
recovery.” Id. Methane, which is the principal component of natural gas, is
traded in large volumes across the United States. See ENERGY INFO. ADMIN.,
U.S. DEPT. OF ENERGY, NATURAL GAS EXPLAINED, http://www.eia.doe.gov/
energyexplained/index.cfm?page=natural_gas_home (last visited Oct. 26, 2011);
ENERGY INFO. ADMIN., U.S. DEPT. OF ENERGY, SUMMARY OF NATURAL GAS SUPPLY
AND
DISPOSITION
IN
THE
UNITED
STATES
(2011),
available
at
http://www.eia.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_mont
hly/current/pdf/ table_01.pdf. Nitrous oxide (laughing gas) has long been
regulated as an anesthetic by the FDA. Michael J. Murray & William J.
Murray, Nitrous Oxide Availability, 20 J. CLIN. PHARMACOLOGY 202 (1980). It is
also used by the food industry as a propellant in such popular items as whipped
cream. Id. The other GHGs, meanwhile, only exist because industrial chemists
have synthesized them for use in commercial and industrial applications.
108. Lopez, 514 U.S. at 561.
109. See Raich, 545 U.S. at 25-27.
110. See id. at 28-29.
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law would most likely be framed as an attack upon the entire
regulatory scheme. Accordingly, the Raich exception for noneconomic activities would not save a cap-and-trade scheme if the
Court determines that such a scheme is primarily directed at
non-economic activity.111
However, a challenge to EPA’s individual GHG rules would
fit neatly into the rubric under which the Raich Court analyzed
the marijuana possession ban contained in the Controlled
Substances Act. As in Raich, the Court will likely treat federal
GHG rules as a single element within a larger regulatory scheme
— in this case, the Clean Air Act. Supporters could then argue
that the CAA itself regulates interstate economic activity: the
emission of pollutants into the air that can harm public health
and disrupt natural resources.112 Supporters will have a difficult
time, however, convincing a court that without EPA’s GHG
regulations, the overall scheme to protect the economy from the
effects of pollution would be undermined. In contrast to the
possession ban at issue in Gonzales v. Raich, the elimination of
GHG regulations would not make enforcement of the CAA’s other
provisions more difficult,113 since none of the EPA’s other
enforcement programs would be affected if GHG regulations were
struck down. For that reason, if the Court concludes that the
emission of GHGs is not, by its nature, an economic endeavor, it
is likely to rule that both cap-and-trade and GHG regulations
under the CAA are unconstitutional.
111. The Raich exception would be relevant, however, to an “as-applied”
challenge to a cap-and-trade bill. Such a challenge would if a single emitter
challenged the constitutionality of a future cap-and-trade law as applied to its
own wholly intra-state or non-economic activity.
112. The larger question of whether the CAA as a whole is constitutional after
Lopez and Morrison is beyond the scope of this Comment. There are, however,
other components of the CAA that, I believe, render it less susceptible to attack
than are the GHG regulations considered here.
113. See Raich, 545 U.S. at 22 (“[W]e have no difficulty concluding that
Congress had a rational basis for believing that failure to regulate the intrastate
manufacture and possession of marijuana would leave a gaping hole in the
CSA.”).
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C. Issue Three: Does the Regulated Activity, in the
Aggregate, “Substantially Affect” Commerce in a Direct,
Unattenuated Manner?
If the Court agrees with supporters that emitting GHGs is an
economic activity, it will next inquire whether the activity, in the
aggregate “substantially affects” interstate commerce in a way
that is not “attenuated.”114 Opponents will likely point out that
all U.S. emissions, in the aggregate, amount to less than twenty
percent of the world’s energy-related emissions.115 Given that
eighty percent of global GHG emissions would not be affected by
even the most robust national regulations,116 opponents may
argue that regulating only U.S. emissions will not substantially
affect commerce because even if aggregated, these emission
reductions will not substantially reduce the rate at which our
climate changes.
Opponents could also argue that the
uncertainty inherent in climate modeling renders our predictions
about the effects of global climate change on weather, sea level,
disease, or insurance costs too speculative and uncertain to
satisfy Morrison’s requirement that any link to interstate
commerce not be “attenuated,”117 or the Court’s admonition that
the Commerce Clause should not be stretched to cover activities
whose effects on interstate commerce are “so indirect and remote
that to embrace them, in view of our complex society, would
effectually obliterate the distinction between what is national and
what is local and create a completely centralized government.”118
In response, supporters of GHG regulations could argue that
the Supreme Court has so far declined to “adopt a categorical rule
114. Note that if a court determines as an initial matter that the mere
emission of GHGs by cars or power plants is not an economic activity, the court
will not “aggregate” the effects of all these “non-economic” activities when
assessing whether the regulated activity exerts a “substantial effect” on
interstate commerce. See supra Part II-B-ii.
115. See U.S. ENERGY INFO. ADMIN., EMISSIONS OF GREENHOUSE GASES IN THE
UNITED STATES 2008 7 (2009), http://www.eia.doe.gov/oiaf/1605/ggrpt/pdf/
0573(2008).pdf.
116. See id.
117. United States v. Morrison, 529 U.S. 598, 612 (2000).
118. United States v. Lopez, 514 U.S. 549, 557 (1995) (quoting NLRB v. Jones
& Laughlin Steel Corp., 301 U.S. 1, 37 (1937)); accord Morrison, 529 U.S. at 608.
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against aggregating the effects of any noneconomic activity.”119 If
the challenged cap-and-trade legislation is accompanied by
congressional findings that the emission of GHGs affects
interstate commerce,120 supporters could cite these findings to
support their case. However, as Morrison demonstrates, the
presence of findings will not be sufficient to end the debate.
Supporters may therefore have to defend the argument that the
emission of GHGs from U.S. sources, if left unchanged, will
directly affect the climate, alter weather patterns, raise sea level,
and acidify the oceans. Each of these changes, supporters could
argue, will have a substantial effect on interstate commerce by
increasing the cost of insurance, causing industries and people to
relocate away from the coasts, or destroying commercial fisheries.
Throughout, supporters will have to overcome their opponents’
allegations that climate science is too uncertain to justify
anything more than an attenuated or postulated effect on
interstate commerce by presenting extensive scientific and
economic evidence to support their contentions.
It is important to note that supporters’ arguments will be
more difficult to make with a piecemeal regulatory scheme like
EPA’s GHG “Tailoring Rule”121 than with a comprehensive,
aggressive, economy-wide scheme for GHG regulation. If the
share of world GHG emissions reached by the challenged
legislation or regulation falls to ten percent or less of global
emissions because the challenged law contains generous
exemptions for specific industries or sources, opponents’
argument that the regulated activities will not substantially
affect the global climate — and through it, interstate commerce
— will become even stronger.
119. Morrison, 529 U.S. at 613.
120. See, e.g., American Clean Energy and Security Act of 2009, H.R. 2454,
111th Cong. § 701 (as passed by the House, June 26, 2009).
121. Prevention of Significant Deterioration and Title V Greenhouse Gas
Tailoring Rule, 75 Fed. Reg. 31,514-01 (June 3, 2010) (to be codified at 40 C.F.R.
§§ 51, 52, 70, and 71). The rule limits GHG requirements under the Title V and
the Prevention of Significant Deterioration programs of the CAA to entities
emitting over 100,000 tons per year of CO2e (carbon dioxide equivalents) or
250,000 tons per year (tpy) of GHGs, leaving smaller emitters effectively
unregulated.
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Supporters may, ironically, find a better argument for
regulating U.S. greenhouse gas emissions by resorting to the
international trade component of Congress’s commerce power. In
addition to granting Congress the power to regulate interstate
commerce, the Commerce Clause also grants Congress the
authority “to regulate commerce with foreign nations.”122 As a
general rule, predictions about the net global effect of greenhouse
gas emissions on weather patterns, sea level rise, and ocean
acidification are more dependable and less speculative than
predictions about local or regional effects.123 Therefore, although
present climate science may not be able to predict with enough
certainty the effects of a given quantity of GHG emissions upon
the United States, it may be able to predict, with sufficient
certainty to pass even a more conservative Supreme Court
Justice’s sniff test, the likely effect on global trade that will result
from a given quantity of emissions. Thus, supporters may wish to
argue that regulating GHG emissions will affect not only
interstate commerce, but also international commerce.
Another counterintuitive argument to buttress supporters’
position would focus on some of the positive consequences of
increasing levels of GHGs in the atmosphere. For example,
carbon dioxide (CO2) — the principal GHG — can act as a
fertilizer for many crops, stimulating faster growth and greater
yields.124 Many of these crops, such as wheat and barley, are
themselves commodities that are heavily traded in interstate
commerce.
Consequently, supporters could argue that any
increases to CO2 concentrations in the atmosphere which result
from industrial emissions will directly, and somewhat more
122. U.S. CONST. art. I, § 8, cl. 3.
123. See David A. Randall et al., Models and their Evaluation, in
INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, CONTRIBUTION OF WORKING
GROUP I TO THE FOURTH ASSESSMENT REPORT OF THE INTERGOVERNMENTAL PANEL
ON CLIMATE CHANGE 589, 601 (Susan Solomon et al. eds., 2007), available at
http://www.ipcc.ch/pdf/assessment-report/ar4/wg1/ar4-wg1-chapter8.pdf
(“confidence in the changes projected by global models decreases at smaller
scales”).
124. See generally B.A. Kimball & S.B. Idso, Increasing Atmospheric CO2:
Effects on Crop Yield, Water Use and Climate, 7 AGRIC. WATER MGMT. 55 (1983)
(finding that increases in atmospheric carbon dioxide levels will increase
agricultural yields for some food crops).
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predictably, affect the supply of these commodities in national
and international markets.
Finally, supporters could argue that the failure to regulate
industrial emissions of GHGs at the federal level will set off a
regulatory “race to the bottom” in which states (and the rest of
the world) will compete for GHG-intensive industries by cutting
existing GHG requirements or refusing to implement more
stringent
regulations.
This
“destructive
interstate
125
competition,” supporters could argue, will impact the interstate
and international markets for nearly every consumer and
industrial product that requires energy to produce. Although this
kind of argument appears to have fallen out of favor in the
Supreme Court in recent years, it has never officially been
overruled. Indeed, even after Lopez, several courts of appeals
have relied on this argument to uphold existing environmental
laws.126
IV. CONCLUSION AND RECOMMENDATIONS
As the previous sections demonstrate, the Supreme Court’s
decisions in Lopez and Morrison have opened several new lines of
attack for opponents of a cap-and-trade bill or of EPA’s GHG
rules. Although it is not clear that these attacks will, in the end,
carry the day, it is no longer a foregone conclusion that GHG
regulations will survive a challenge under the Commerce Clause.
In light of the Court’s post-Lopez shift in Commerce Clause
125. Hodel, 452 U.S. at 282.
126. See, e.g., Gibbs v. Babbitt, 214 F.3d 483, 501 (4th Cir. 2000) (“Congress
may . . . arrest the ‘race to the bottom’ in order to prevent interstate competition
whose overall effect would damage the quality of the national environment.”);
United States v. Ho, 311 F.3d 589, 603-04 (5th Cir. 2002) (arguing that CAA
asbestos standards are constitutional as applied to a defendant, because
defendant’s violation of the standards harmed the interstate market in asbestos
removal by giving him a commercial advantage over companies that complied
with the CAA); Nat’l Ass’n of Home Builders v. Babbitt, 130 F.3d 1041, 1054
(D.C. Cir. 1997) (Congress may regulate “the product of destructive interstate
competition . . . .”); Rancho Viejo, LLC v. Norton, 323 F.3d 1062, 1079 (D.C. Cir.
2003) (ESA is constitutional, in part, because it aims to prevent a “race to the
bottom” among states that would “damage the quality of the national
environment”) (citing Gibbs, 214 F.3d at 501).
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analysis, supporters of federal GHG regulations would do well to
keep the following recommendations in mind.
First, supporters should pay careful attention to how the law
or regulation describes what it regulates. After Lopez and
Morrison, a court is much more likely to uphold a measure that
regulates the production of electricity or goods directly and
explicitly than it is to uphold one that regulates “quintessentially
economic” activities127 only indirectly or secondarily — for
example, by placing limits on the emission of GHGs into the
atmosphere. In other words, the law or regulation should make
clear that its goal is to change the way that electricity or energyintensive goods are produced, rather than to alter the
concentration of GHGs in the atmosphere.
Second, authors of cap-and-trade legislation or GHG
regulations should make detailed findings to support the
argument that the object of regulation is “economic in nature.”128
These findings should address the effect of GHG emissions on the
climate and the resulting impact of climate change and ocean
acidification on interstate and foreign commerce. Congressional
findings should also explicitly link the causes of climate change to
interstate commercial activities.
In addition, they should
highlight the existing commodity markets in carbon dioxide,
methane, nitrous oxide, and other regulated gases, and the
opportunity costs of emitting those GHGs as wastes instead of
capturing them and supplying them to the market. These
findings should also explain how a regulatory “race to the bottom”
in GHG regulations will have a destructive impact on interstate
or international commerce. Although such findings will not
substitute for the Court’s independent analysis as to whether the
regulated activities fall within the Commerce Power,129 they will
certainly add weight to supporters’ arguments and make a
Commerce Clause challenge less likely.
127. Cf. Gonzales v. Raich, 545 U.S. 1, 25 (2005).
128. United States v. Morrison, 529 U.S. 598, 613 (2000) (citing United States
v. Lopez, 514 U.S. 549, 559-60 (1995)).
129. See Morrison, 529 U.S. at 614-15 (quoting Lopez, 514 U.S. at 557 n.2)
(whether a challenged law constitutionally regulates interstate commerce is a
“judicial rather than a legislative question [that] can be settled finally only by”
the Court).
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Third, the authors of climate legislation or regulations should
explicitly limit the scope of the regulations to actors who sell
goods or services into interstate commerce, use inputs obtained
through interstate commerce, employ individuals who can move
in interstate commerce, or otherwise substantially affect
interstate commerce. Alternatively, they could explicitly exempt
from regulation any activities that are not undertaken for
“economic” purposes. Although such a “jurisdictional element”
will not necessarily save an otherwise unconstitutional statute,
the presence of a jurisdictional element could “lend support to the
argument that [the challenged statute] is sufficiently tied to
interstate commerce.”130
Fourth, supporters should push for the greatest possible
scope of regulation, and avoid exempting large sources of GHGs.
The only statutes the Court has struck down thus far on
Commerce Clause grounds have been narrow, single-issue
regulations that were not integral components of larger
regulatory schemes. In contrast, the Court recently upheld a law
that regulated non-economic activity because it was “an essential
part of a larger regulation of economic activity.”131
The
implication for both legislation and the EPA rules is that the
broader and more comprehensive the GHG regulatory scheme,
the more likely it is to be upheld. Therefore, supporters should be
wary of piecemeal regulations or schemes that only regulate a
small subset of interstate economic activities that lead to GHG
emissions. Such schemes will be harder to defend as being
“larger regulation[s] of economic activities”132 for two reasons:
first, because the Court may perceive their scope as more akin to
the narrow gun possession and gender-motivated crime statutes
that were struck down in Lopez and Morrison than to the
comprehensive and wide-ranging Controlled Substances Act that
was upheld in Raich; and second, because the argument that the
130. Id. at 613; See also Lopez, 514 U.S. at 562 (questioning the
constitutionality of the challenged statute because it “has no express
jurisdictional element which might limit its reach to a discrete set of firearm
possessions that additionally have an explicit connection with or effect on
interstate commerce”).
131. See Raich, 545 U.S. at 30-32.
132. Id. at 24.
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emissions of GHGs from individual regulated entities will have a
substantial effect on interstate (or international) commerce will
be more difficult if only a small percent of total emissions is
actually regulated.133
As a last resort, advocates may wish to challenge two of the
Court’s assumptions in Lopez and Morrison. First, supporters
could argue that environmental laws — especially those that
address nationwide or global-scale problems — should be
exempted from the Lopez-Morrison framework because federal
regulation in this area does not invade the traditional regulatory
sphere of the states134 and cannot be remedied through state-bystate regulation. Although it is true that states have typically
retained control over the water and natural resources contained
within their borders, it is equally true that this power has yielded
to federal regulation where intrastate activities could impair (or
improve) the economies of other states.135 In addition, neither
climate change nor other regional pollution problems can ever be
abated by purely local actions or regulations.
Therefore,
regardless of whether the Founders anticipated the danger that
climate change, the depletion of the stratospheric ozone, ocean
acidification, or global habitat destruction would pose to the
health and livelihoods of Americans (and surely they did not),
supporters of federal regulation in these areas could argue that
the essence of the Commerce Clause is the power of the federal
government to coordinate state actions when intrastate
regulations alone will not protect the national economy.136
133. See supra Part III-C.
134. Lopez, 514 U.S. at 577 (Kennedy, J., concurring); see also Morrison, 529
U.S. 611 (citing Lopez, 514 U.S. at 577, for the proposition that “[w]ere the
Federal Government to take over the regulation of entire areas of traditional
state concern, areas having nothing to do with the regulation of commercial
activities, the boundaries between the spheres of federal and state authority
would blur.”).
135. See, e.g., Clean Air Act, 42 U.S.C. §§ 7401—7671(q) (2006); Clean Water
Act, 33 U.S.C. §§ 1251—1376 (2006).
136. This idea is not unheard of in Commerce Clause jurisprudence. In Hodel,
the Court pointed out that state-by-state regulations can often have a
detrimental effect on the national environment because of the tendency of states
to reduce their environmental regulations in order to attract polluting
businesses away from neighboring states. See Hodel, 452 U.S. at 282. The costs
of anthropogenic climate change and other global pollution problems are often
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Supporters could argue that a new category — “regulations
designed to protect the national or international environment
against destructive interstate competition” — should supplement
the trilogy of well-established Commerce Clause categories137
whose regulation the Court treats as presumptively reasonable
under the Commerce Clause.138
Second, supporters could point out that the Court’s definition
of economics is woefully narrow and outdated. The authors of the
Constitution could not possibly have anticipated the full impact
that intrastate activities — even those that fall within “areas of
traditional state concern”139 — could have on interstate
commerce. Moreover, supporters could argue, following Justice
Breyer’s dissent in Morrison, that the distinction between
“economic” and “non-economic” behavior is too elusive and
unworkable a basis for limiting the power of the federal
government.140 As modern social scientists have painstakingly
pointed out, numerous “areas of traditional state concern,” such
as crime, education, or family law, exert significant and
quantifiable effects on interstate commercial outcomes.141 Thus,
realized thousands of miles away or dispersed across the country, while the
economic benefits of the industries that cause these problems is felt directly
within the state. Therefore, nearly every state has the perverse incentive to
maintain lax regulations on the emission of these global pollutants. In such a
scenario only federal preemption can overcome states’ self-interested economic
incentives to doing nothing about these problems.
137. These categories are “instrumentalities,” “channels,” and “persons or
things” in interstate commerce. See supra Part II-A.
138. Cf. Nat’l Ass’n of Home Builders v. Babbitt, 130 F.3d 1041, 1057 (D.C.
Cir. 1997) (“Congress has the power to prevent interstate competition that will
result in the destruction of endangered species just as it has the power to
prevent interstate competition that will result in harm to the environment”).
139. Lopez, 514 U.S. at 577 (Kennedy, J., concurring); see also Morrison, 529
U.S. at 611 (citing Lopez, 514 U.S. at 577).
140. See Morrison, 529 U.S. at 656-61 (Breyer, J., dissenting).
141. See, e.g., Lopez, 514 U.S. at 618-19 (Breyer, J., dissenting) (citing
numerous studies documenting a tie between education, gun violence, and
economic prosperity); Morrison, 529 U.S. at 656 (Breyer, J., dissenting)
(discussing report by the Government Accountability Office detailing economic
motivations for gender-motivated crimes); see generally Wesley Skogan, Fear of
Crime and Neighborhood Change, 8 CRIME & JUSTICE 203 (1986) (documenting
adverse economic effects of crime on neighborhood business development); David
Card, The Causal Effect of Education on Earnings, 3 HANDBOOK OF LABOR ECON.
1801 (1999) (estimating the effects of education on personal income for specific
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supporters of GHG regulation could argue that the Court’s
narrow view of what constitutes “commerce” or an “economic
endeavor”142 ignores the reality that nearly all of the activities
traditionally regulated by the states — marriage, childbearing,
education, crime, et cetera — can have profound, predictable, and
non-trivial impacts on interstate commerce. Given that this is so,
supporters could make a strong case for discarding Lopez’s
“economic endeavor” test as unworkable in light of our modern
understanding of economics.
Ultimately, the constitutional fate of federal GHG
regulations has yet to be determined. As the previous section
demonstrates, their fate will depend in large part on the Court’s
answers to four questions: how to characterize the challenged
regulations; whether to extend the “economic endeavor” litmus
test to future challenges of environmental laws; how rigorously to
adhere to a constrained interpretation of Wickard’s aggregation
principle; and how stringently to apply the requirement that
regulated activities must have direct, rather than attenuated,
effects on commerce.143 However, no matter how the Supreme
Court’s Commerce Clause jurisprudence evolves in the future,144
subgroups of the population); Paul R. Amato, The Consequences of Divorce for
Adults and Children, 62 J. MARRIAGE & FAMILY 1269 (2000) (documenting
impacts of divorce on economic well-being of adults and children); Jane
Waldfogel, The Effect of Children on Women's Wages, 62 AM. SOCIOLOGICAL REV.
209 (1997) (exploring different explanations for the observed impact of children
on women’s income); Marieka M. Klawitter & Victor Flatt, The Effects of State
and Local Antidiscrimination Policies on Earnings for Gays and Lesbians, 17 J.
POL’Y ANALYSIS & MGMT. 658 (1998) (documenting the effects of laws banning
discrimination based on sexual orientation on individual earnings and
household income); M.V. Lee Badgett, The Wage Effects of Sexual Orientation
Discrimination, 48 INDUS. & LAB. REL. REV. 726 (1995) (finding significant
effects on income from discrimination based on sexual orientation); Robert J.
Sampson, John H. Laub, & Christopher Wimer, Does Marriage Reduce Crime? A
Counterfactual Approach to Within-Individual Causal Effects, 44 CRIMINOLOGY
465 (2006) (documenting the link between marriage and propensity to commit
crimes).
142. See Morrison, 529 U.S. at 611.
143. See supra Part III.
144. In the six years since the Court last granted certiorari to a Commerce
Clause challenge it truly could not avoid (Gonzales v. Raich, 545 U.S. 1, decided
on June 6, 2005), four new justices have joined the Court. Therefore, even the
most assiduous Court-watchers can only speculate as to how Chief Justice John
Roberts and Associate Justices Samuel Alito, Sonia Sotomayor, and Elena
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supporters can dramatically improve the likelihood that the
Court will uphold a cap-and-trade law or EPA-issued GHG rule
by attending seriously to the issues raised in this Comment.
Kagan will address the thorny questions created by the Court’s decisions in
Lopez and Morrison.
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